Stop, Thief! Pay Me What I’ve Earned!

Preventing Wage Theft

A whole industry — “loss prevention” — exists to deter employees from stealing from their employers. These “agents” also uncover theft after it occurred, finger miscreants, extract confessions and turn them over to the police. These now fired employees are arrested and go through the criminal “justice” system that sometimes sentences them to prison. At a minimum, they are fined in addition to paying restitution.

It sounds right so far, doesn’t it? After all, those employees committed a crime. But what about employers who steal from their employees through a crime known as wage theft? Who do you suppose steals the most, employees or employers?

Stealing $50 billion annually from their employees, American employers steal $32 billion more from workers than the employees steal from businesses. 66% of workers are victimized by wage theft that amounts to about $2,600 out of their $17,000 in average earnings or about 1.5% of income that is badly needed for the basic necessities of life.

Methods vary, but wage theft is is common among low wage employers as well as white-collar employers, large and small. A recent post (access it here) examined exactly how wage theft occurs. Now, it’s time to examine how to stop it.

Will is essential. Given that political pressure, purchased by donors interested in reducing government oversight, has shrunk law enforcement budgets to the point of ineffectiveness, we must, as a society, reconstruct enough backbone to stand up to the greedy rich who benefit most from the crime of wage theft. We don’t want to think of bosses as being the bad guys, but subordinate managers often succumb to pressure generated by inadequate payroll budgets. To satisfy demands placed on them and get the job done, they steal from employees, reducing payroll costs to keep their own jobs.

Top management is the real culprit in large businesses, often low wage varieties such as fast food and retailing. But top management also supplies other ways and means of enabling the wage theft that boosts their bottom line. The same is true in smaller companies where owners and bosses follow the same course, frequently more directly. Audits and laws are of no avail where detection and enforcement are prevented.

Jailing managers who commit wage theft until the CEO of the company could be accessed through extradition to serve a prison sentence would solve the problem quickly. If we summon the will to address wage theft adequately, other correctives may be found that are equally effective and more productive. Here are a few suggestions:

Provide adequate funding for investigative and enforcement divisions of wage and hour agencies. Publicize their availability and increase on-site inspections.

Add a substantial statement about wage theft to the rights poster that employers are required to maintain in a prominent location. Allow law enforcement authorities to make unannounced visits to businesses and quiz employees about their knowledge of their rights and treatment by management.

Require employers to make monthly payments into an escrow account maintained to cover restitution claims and fines levied by courts when employers are found guilty of wage theft. Currently, many employers avoid paying either fines or restitution.

Institute an online data repository detailing information about employers and managers who have been found guilty of wage theft. Prospective employees can consult this information and employees can circulate it among themselves, especially through the Internet. Let thieves know they are in the spotlight.

Combat wage theft through abuse of workers’ compensation by strengthening rather than eviscerating the law. Conservative organizations have begun a push in state legislatures to undermine the purpose and effectiveness of workers’ compensation laws to the benefit of profits through subterfuge. Wage theft through abuse of workers’ compensation processes can also be prevented by aggressive audits of insurance companies, including the monitoring of telephone and email communications in order to prevent the collusion that not infrequently prevents adequate medical treatment for workers. Managers who participate in fraud on behalf of their companies could also be uncovered.

Whistleblowers should be encouraged throughout all businesses and levels of government. Too often, whistleblowers have been scapegoated and made to appear sinister and evil as they have sought to illuminate adverse conditions in workplaces or government agencies. Instead, whistleblowers should protected and encouraged.

Government bodies that review workers’ compensation claims, whistleblower evidence and other personnel related issues should be sufficiently funded to be effective and should be sheltered from influence by businesses and their organizations. Law enforcement agencies should be sufficiently funded and should be alert to violations of the law by government agencies, oversight boards and other bodies.

Permit workers to create labor organizations in their workplaces. Studies have found that where unions are in place, there is little wage theft. While the distinction between labor organizations and unions can be either distinct or inconsequential, however constituted, they provide a means of receiving and processing complaints from workers. Labor organizations can also investigate and intervene, providing an effective means of securing justice for workers.

By virtue of the fact that labor organizations are in the workplace, they also provide continuous observation that is the best prevention. Unlike loss prevention teams trained in extended interrogation methods, workers do not have the capability of grilling managers for hours to uncover or explain wage theft. Given the lack of equality under the law, employees need labor organizations to protect them.

Prevention is better than punishment. Simply by being in place, labor organizations serve the best interests of workers, businesses and the whole of citizenry. We can cut losses across the board by putting resources in the right place through labor organizations.

Some states have begun to be sensitive to wage theft and the need for prevention, taking steps to implement some of the steps outlined above. But many state legislatures are under the influence of conservative organizations that work against the best interests of workers and much more needs to be done everywhere. For success, voters and workers need to flex the muscle of their collective will.